The impact of health expenditure on households and options for alternative financing
Regional Committee for the Eastern Mediterranean, Fifty-first Session; Technical paper; EM/RC51/4
EM/RC51/4 Technical paper: The impact of health expenditure on households and options for alternative financing
Total health expenditure as a share of world gross domestic product increased from 3% in 1948 to over 8% today. However, there is wide variation in per capita health expenditure between and within the different countries of the world and the Eastern Mediterranean Region. Most governments of the Region have had to cut the real per capita budget for health because of poor economic performance. In order to maintain the integrity of the public health system, public health policy-makers have introduced cost containment and cost recovery strategies, including indiscriminate user fees. As a result, households have increasingly been facing financial difficulties in paying for necessary health services.
Empirical results strongly suggest that out-of-pocket spending for health services is the main culprit behind catastrophic health expenditures. In most poor and middle-income countries of the Region out-of-pocket spending accounts for more than 50% of total health expenditure. Prepayment schemes provide a direct route to elimination of catastrophic health expenditures. There are several alternative health care financing options in order to develop prepayment schemes and universal coverage, including tax-funded government-sponsored schemes and social, private and community-based health insurance schemes.
The paper makes use of the available global and regional data and studies, such as national health accounts, and household and public health expenditure reviews. In the first part of the paper health care expenditure patterns in the world and the Region and the relationship between health and poverty are reviewed. Catastrophic health care expenditure and its determinants are discussed in the second part of the paper, while in the third part, options for alternative financing are presented. Finally, conclusions and recommendations are presented.